Italian banks pull out of contract, prompt strike threats

Lenders' group announced 19,000 job cuts since 2011
||Last Updated: 09/17/2013

ROME (Reuters) — Italy's biggest banks on Monday unilaterally pulled out of a labour contract with more than 300,000 employees as they struggle to rebuild profits and shed staff, prompting labour unions to threaten strikes.

Lenders' group ABI annulled the current collective deal more than nine months before it expires in mid-2014, sending a message it wants substantial cost cuts in the next agreement.

In a letter to unions, ABI said falling profits and the need to set aside more capital because of regulatory requirements were behind the decision.

The early exit from the contract will give the two sides more time to negotiate before next year's June deadline, ABI said.

Hit hard by the euro zone debt crisis and forced to boost their capital base, Italian lenders have sold assets, closed branches and announced 19,000 job cuts since 2011 as they seek to reduce costs and improve traditionally weak profitability.

But unions said last year they feared the industry could be preparing for as many as 35,000 job losses overall.

The average return on equity for Italian lenders fell 0.47 per cent in 2012, from a 2.38 per cent increase the previous year, according to data compiled by ABI every year.

The contract move "is an unheard of attack on workers' rights, and we will respond by force, including with a strike," Lando Maria Sileoni, secretary general of the FABI union, said. Other union leaders echoed Sileoni's strike warning.

Italy's longest recession since the end of World War II, which began in mid-2011, has depressed banks' profits by forcing them to set aside more money to cover for soaring bad loans.

The lenders' large stock of Italian government bonds is also exposing them to the risk of a resurgent euro zone crisis.

Add Comment

  • *
  • *
  • *
  • *